Saturday, September 27, 2008

Gated communities as artwork « Susan’s Writings: "Gated communities, seen as a trend in many countries by conceptual artist Juan Kasari, is the topic of this exhibition. It is presented very well through a series of mixed media paintings and video works, and deals with a half-documentary micro cosmos. It is an art study of a closed community where people live their own private and sheltered lives outside of society, dreaming for security and prestige."-----------------At least Mr. Kasari doesn't insist that they are cowering in fear, expecting a horde of zombies to storm the gate moaning, "Brrraaaaiiiinnnnnssssss!"

Kirk Stephenson, who was married with an eight-year-old son, died in the path of a 100mph express train at Taplow railway station, Berkshire.

Mr Stephenson is believed to have taken his own life after succumbing to mounting personal pressures as the world’s financial markets went into meltdown."-----------This is sad. I was wondering when we would read of a suicide. That happened with Enron, too, and of course the stockbrokers leaping out windows was cartoon fodder from the Great Depression.

A law enforcement task force first served search warrants at homes, offices and clubs all across the Las Vegas Valley Wednesday as part of what might become a political corruption investigation."--------------This is an intriguing situation. The articles I have seen so far tell me that the press doesn't have the whole story yet. They say, "Lawmen believe [contractor Leon] Benzer and other persons conspired to take over the boards, hire Benzer to do repair work and funnel lucrative lawsuit cases to certain law firms." (I haven't seen police referred to as "lawmen" since the last John Wayne rerun I watched--lots of "lawmen" seem to be women these days.) The press seems to think that there is some sort of collusion among professionals, run by a contractor and enabled by rigged elections. Perhaps the argument is going to be that this contractor stage-manages elections and puts in BOD members who follow his orders and hire a certain law firm which in turn hires a particular set of experts who in turn present a case that generates a pot of money, the repairs are overseen by a certain property manager, and everybody profits.

But there are plenty of questions unanswered.

1. Such as, what exactly is the suspected crime that led to such a drastic step as searching an attorney's offices? Believe me, that is a big deal, because of attorney-client privilege. Obviously, I get why owners would be angry at having their associations taken over, but usually such things are civil matters. What made this one into a criminal investigation?

2. How can you have "outsiders" on an HOA or condo association BOD? Don't you have to be a member to serve as an officer?

3. If the vote total goes way up from one election to another, is that because of ballot box stuffing and/or ineligible voters, which obviously would be bad, or is it because somebody solicited votes from absentee owners? If the latter, why is that illegal? I get that the resident owners don't like it, but if absentee owners are members, don't they get to vote if they want to? If somebody helps them vote, so what? In political science we call that GOTV...Get Out the Vote. (It's the Chicago Way. We even have dead people voting here.) Don't these associations have some way of determining that each ballot they count is from an actual owner?

4. And why is it criminal if one law firm represents lots of HOAs, and in every case that has the same kinds of damages, they hire the same contractor, estimator, soils engineer, and so forth? And if one contractor or property manager habitually refers cases to the same attorneys, is that illegal? Referrals are how law firms get construction defect cases.

5. And what is the relationship, if any, of all this to actual political corruption? Not clear from the articles.

6. Fred Pilot asks if this would be happening but for the unfolding real estate and mortgage meltdown. Good question, and I don't know. It would depend on how serious this really is. Is there some larger dimension to this investigation that the press doesn't know about?

I assume law enforcement has at least tentative answers to these questions or they wouldn't be executing search warrants. But so far, this is a puzzling situation that leaves me curious.

S.E.C. Concedes Oversight Flaws Fueled Collapse - NYTimes.com: "WASHINGTON — The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street’s largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down."-------------Talk about closing the barn door after the horse got out.

South Florida gated communities link teens to security troubles -- South Florida Sun-Sentinel.com: "Gated communities became popular in South Florida in the 1970s, promising an extra level of security and prestige, according to Joanna Lombard, a professor of architecture at the University of Miami. But with that security comes challenges, including teen behavior problems and unexpected costs."----------Ironic. The gates end up being expensive because teenagers break them. According to this article about the culture of gated teenagers, they express their existential teenage angst-ridden gatedness by acting out. I guess if it isn't one thing, it's another.

Weekend America: Gated Into Foreclosure: "San Niccolo has been feeling the effects of the real estate crisis for more than a year now. A lot of houses are vacant, post-foreclosure. Others are being rented out to college kids, or multiple families, by investors who'd hoped to flip the properties for a quick profit but couldn't find buyers.

Houses that went for $600,000 a few years ago are now on the market for half that. And the neighbors say the wrought iron front gate, supposed to symbolize prestige and security, is regularly rammed by tow trucks trying to get in to repossess residents' cars. Vandalism has become a problem in the neighborhood: break-ins, slashed tires, broken windshields."------------------This is a high-priced gated community in Las Vegas. The houses sold for $500,000 and higher not too long ago.

Friday, September 26, 2008

Statement by John McCain, 2 1/2 years ago

Senator John McCainMay 26, 2006

Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.Quick InfoS-90 Federal Housing Enterprise Regulatory Reform Act of 2005Last Action: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.Status: Dead

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190,to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

Support, criticism for plan to rewrite mortgage-loan terms: "A plan by Democrats to allow bankruptcy judges to rewrite mortgage-loan terms for struggling homeowners as part of the proposed $700 billion Wall Street bailout has the support of some South Florida jurists. The judges say the proposal would let them lower the interest rate on home loans for borrowers who enter Chapter 13 bankruptcy because of a pending foreclosure. A Chapter 13 allows individuals to reorganize their debts. Right now, bankruptcy judges can modify the terms of all kinds of loans except those on a first home.''Since we can't help [homeowners], they end up losing their home and that may mean breaking up their family and putting them out on the street,'' said U.S. Bankruptcy Judge A. Jay Cristol in Miami. Added U.S. Bankruptcy Judge Laurel M. Isicoff, also in Miami: ''Every bankruptcy judge I've spoken with feels strongly that this is a tool that they should be given.'' She has talked with about 30 judges, she said. Cristol said the proposal is a ''win-win'' for homeowners and lenders. Homeowners keep their house and lenders have a performing loan rather then getting the keys to a property they'll then have to sell."--------------It seems like a good idea to me, too. But the Mortgage Bankers Association is against it.

Las Vegas Now | I-Team: New Details Emerge in Homeowners Association Probe: "Mountains of financial and legal documents seized by a law enforcement task force are being scrutinized. FBI Agents and Metro Detectives worked into the night, serving search warrants at nine locations to find evidence of what they believe is political corruption involving local homeowner associations.

The FBI and Metro are still not talking, nor do we expect them to say anything. The investigation is just getting started and it's now obvious it stretches in many directions.

Investigators already see a pattern, whereby the same law firms file construction defect lawsuits, the same contractors are hired to do the work, the same management company oversees the whole thing, and the homeowner boards are subjected to something like a political coup.

The elections, homeowners say, are rigged."------------------------They are talking about "dozens" of HOAs being "hijacked."

TheHill.com: "Senate Democratic leaders unveiled their $56 billion economic stimulus package on Thursday, less than an hour before leaving to meet President Bush at the White House to continue the fragile negotiations on the financial rescue bill."-------------So that is the Democrat price tag for supporting the bailout?

[update: Here is a summary of what the House Republicans want, which isn't what Bush and Paulson want. So I guess the situation is the House and Senate Democrats will support something like the Paulson plan if they get their $56 million; the House Republicans don't like the plan, which is being panned like crazy by many conservatives; and neither McCain nor Obama has so far tried to play the role of Bigfoot. Harry Reid is bashing McCain for not being helpful enough, and seems to have forgotten that Obama was sitting there not doing a whole lot either. As the presidential candidate of the party that controls both houses, I would think more leadership would be expected of him than of McCain, but Obama has made a fantastic career out of acting supremely important while doing absolutely nothing, so why change now?]

Steven Pearlstein - Gut Check: "[T]his isn't primarily a bailout for Wall Street -- it's an attempt to jump-start certain credit markets that have broken to the point that nobody is buying, driving down prices to the point where they are well below any reasonable estimate of their long-term economic value.

The basic idea is to use special auctions to recreate a market for these securities with many competing sellers and one buyer (the Treasury), so that a credible 'market' price can be established. If that price turns out to be below what those securities are now valued at on the banks' balance sheets, then banks will have to take the loss. If the price turns out to be higher, then banks may be able to record gains. The point isn't to bail out institutions that have made bad bets and suffered credit losses, but to provide a buyer of last resort so the market can begin pricing again."---------------This is a short and persuasive take on the Paulson proposal. Worth reading for sure.

Pearlstein doesn't talk about the politics, just the policy. Politically, we now have the spectacle of the Democrats blaming the congressional Republicans for the breakdown in negotiations over the bailout. Last time I checked the Democrats had majorities in both houses of Congress and they can surely count on some Republican votes, and the President won't veto it because it's his administration's proposal. So why don't the Democrats just negotiate with the administration, come up with a Bush/Democrats bill, pass it, and take credit for saving the economy? Pelosi told Paulson that the Republicans are the problem, so in fact there is no problem, right?

Except that the Democrats don't want the responsibility of making the decision. They want some sort of bipartisan bailout so they don't take the heat for the current unpopularity of "bailing out Wall Street," and for the possibility that it will be a failure anyway. And they want Republican support on Democrat terms, apparently with all sorts of additional spending for other things and new powers for bankruptcy judges to remake the terms of mortgages. Some of these things may be good ideas. But it comes down to power. They don't want to do this without some sort of Republican leadership on board. Yet, it seems to me that there is so much vehement conservative opposition to this entire bailout concept (listen to talk radio on this) that the Republican leadership will continue to balk. Maybe McCain can twist their arms, maybe not. If he succeeds in getting the Republicans in line (and that's why he went to Washington), we have a bailout and the usual bipartisan blame-and-credit-game afterword. If he fails, the Democrats will have to choose between a) taking responsibility for a huge, complex, and untested policy that may not work, or b) letting the financial sector melt down entirely and trying to blame the resulting depression on Bush, McCain, and the Republican minority in Congress.

BBC NEWS | UK | Pilot completes jetpack challenge: "A Swiss man has become the first person to fly solo across the English Channel using a single jet-propelled wing. Yves Rossy landed safely after the 22-mile (35.4 km) flight from Calais to Dover, which had been twice postponed this week because of bad weather. The former military pilot took less than 10 minutes to complete the crossing and parachute to the ground. The 49-year-old flew on a plane to more than 8,200ft (2,500m), ignited jets on a wing on his back, and jumped out."-----------------I want one of these for my birthday.

Now, Aliso Meadows is so short on cash that it has deferred roof and termite repairs, can't fix rotten wood siding and must wait to fix potholes 'big enough for your families to make Jacuzzi's of,' association officials said."------------Many associations are getting hit hard by the foreclosure meltdown. Banks aren't paying assessments on their REO CID units. Do you think they are going to start paying now, in the middle of a financial crisis? Harder times are coming, it seems.

MyFox Tampa Bay | Homeowners face foreclosure for bushes, fees: "A group of homeowners say they face liens on their homes and possible foreclosure for something as trivial as tall bushes. Others say they're accused of not paying fees when they have. Now, the issue is headed to court."---------------This is the wrong time for HOA boards to get all hard-nosed about minor issues, if you ask me. Thanks to Fred Pilot for this link.

WaMu is largest U.S. bank failure - Yahoo! News: "NEW YORK/WASHINGTON (Reuters) - Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion...It vaults JPMorgan past Bank of America Corp to become the nation's second-largest bank, with $2.04 trillion of assets, just behind Citigroup Inc. Bank of America will go to No. 1 once it completes its planned purchase of Merrill Lynch & Co."----------------At the rate this is going, we will soon have just a few giant banks.

Thursday, September 25, 2008

Rescue plan could hinge on value of bad assets: "Treasury Secretary Henry Paulson's $700 billion financial rescue plan has grown from a program focused on relieving lenders and investors of their bad mortgages to one in which the government would have the authority to take over any kind of problem loan or other asset, from bad credit card debt to commercial real estate securities."------------Fred Pilot wonders if this would include delinquent HOA assessments. Maybe HOAs should start packaging their bad debt as securities and selling it, because if the credit markets dry up they won't be able to borrow to repair common area elements that 1) they have insufficient reserves to repair, and 2) they can't get enough from the owners in regular or special assessments to fix, and 3) there ain't no place else to go but the bank.

China banks told to halt lending to US banks-SCMP | Markets | Markets News | Reuters: "BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday."----------------I think this is what Bush was talking about when he said that "credit markets are frozen." I wonder if Obama thinks this is important enough for him to stop the preening and posturing and go back to Washington. Last time I checked, he was supposedly a US Senator. I realize he thinks he is already President, but it seems that he might actually need to vote "present" again.

Bailout: Full text of Bush's address about economy : "The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses. Before long, these securities became so unreliable that they were not being bought or sold. Investment banks, such as Bear Stearns and Lehman Brothers, found themselves saddled with large amounts of assets they could not sell. They ran out of money needed to meet their immediate obligations, and they faced imminent collapse. Other banks found themselves in severe financial trouble. These banks began holding on to their money, and lending dried up, and the gears of the American financial system began grinding to a halt."----------------I don't pretend to be an expert on the financial sector, but I wish Bush had gone further and explained a couple of things.

The speech laid out the basics. There was a tsunami of cheap and easy money being lent out, creating enormous risk to the financial institutions, and the GSEs were in terrible jeopardy. When housing prices began to fall, the wave began to crash.

But while he correctly pointed to the speculation in housing that occurred, he never mentioned two things, because to do so would set off the blame game and paralyze his efforts to get the bill passed:

1. The Clinton Administration's major initiative to force banks to give home loans to "first time home buyers," meaning people who couldn't afford home ownership. You could call this over-regulation. This got Fannie Mae and Freddie Mac involved in buying all kinds of bad loans, and they passed that on in what turned out to be bad (but guaranteed) securities.

2. The total lack of regulation over the huge array of bizarre derivatives that were spawned to deal with all the excess risk. Credit default swaps proliferated all over the place and led to demands for payment that could not possibly be met--even by a giant like AIG.

So it seems to me that there was both over and under regulation: over-regulation in housing finance to induce reckless lending to people with no money, and under-regulation in the financial sector where they bought and sold all that risk. He avoided mentioning either. That makes the whole thing sound like a big natural disaster instead of something that was created by human action. Maybe that helps get the bailout passed, but doesn't the public need a fuller explanation of how we got here? I can see a typically vapid finger-pointing election "debate" over this between Obama and McCain with nobody explaining why both explanations are part of the real story.

Wednesday, September 24, 2008

Bush: U.S. Citizens to Welcome Our 51 State: "(2008-09-20) — Although it cost more than the Louisiana Purchase and the Alaska purchase combined and offers far less acreage, President George Bush today said he thinks “U.S. citizens will welcome our 51 state with open arms.”

The announcement that the financial realm collectively known as “Wall Street” had applied for statehood follows a week in which the federal government took control of mortgage giants Fannie Mae and Freddie Mac, and insurance megalith AIG. It also comes as news breaks that the U.S. plans to spend up to a $1 trillion to “rescue” other foundering financial firms.

President Bush noted that the newest state is not so much a geographical swath of land as it is “a state of mind.”"----------------You did hear about this, didn't you?

3 News > Business > Story > Cows that milk themselves: "The country's first robotic dairy farm is now up and running, complete with milking robots that allow the cows to choose their own milking time.It is run by robots, milking robots that allow cows the freedom to be milked whenever they choose. Each animal has its own computerised collar giving it access to the milking shed, and monitoring its milk outflow and health."-------------Somebody tell PETA about this so they can stop asking Ben & Jerry to make ice cream with human breast milk (see below).

Beware the Button Police :: Inside Higher Ed :: Higher Education's Source for News, Views and Jobs: "Sporting an Obama or McCain button? Driving a car with one of the campaigns’ bumper stickers? You might need to be careful on University of Illinois campuses.The university system’s ethics office sent a notice to all employees, including faculty members, telling them that they could not wear political buttons on campus or feature bumper stickers on cars parked in campus lots unless the messages on those buttons and stickers were strictly nonpartisan. In addition, professors were told that they could not attend political rallies on campuses if those rallies express support for a candidate or political party. Faculty leaders were stunned by the directives. Some wrote to the ethics office to ask if the message was intended to apply to professors; they were told that it was. At Illinois campuses, as elsewhere, many professors do demonstrate their political convictions on buttons, bumper stickers and the like."----------------Yes, they do "demonstrate their political convictions." But the University of Illinois faculty's political convictions are about 99% on one side: the left. So what we are really talking about is suppression of Obama buttons, Obama bumper stickers, and attendance at Obama rallies. And many professors also demonstrate their convictions in the classroom, which I noticed didn't pop up on the list, presumably because of legitimate concerns about the professors' academic freedom. So, the hard question is, who, if anybody, makes sure professors respect the students' freedoms? How do you address that concern without trampling on the professors?

PETA Urges Ben & Jerry's To Use Human Milk - News Story - WPTZ Plattsburgh: "PETA officials say a move to human breast milk would lessen the suffering of dairy cows and their babies on factory farms and benefit human health."-----------When did the press start doing PETA's bidding here? When a cow reproduces, the offspring is called a "calf," not a BABY. And pardon me for being squeamish, but I'm not buying human breast milk ice cream. Besides, I'd say this whole milk gig is good for cows when you consider the alternative. If we don't use cows to produce milk, why not shoot them and turn them into meat? While on the subject of unpleasant alternatives, I think if you surveyed the nation's cows, they would vote about 9 to 1 that they would rather be milked daily than have their hind legs eaten by a pack of wolves while their front legs are still trying to run away.

Americans reluctant to fund bailout, poll finds - Los Angeles Times: "Asked whether the government should use taxpayer dollars to rescue financial firms whose collapse could have adverse effects on the economy, 55% of the poll's respondents said they did not believe the government should be responsible for funding a bailout plan."--------The precise working of the questions would determine the results in this situation, because most of the respondents probably think Fannie Mae is a candy store.

FinancialRx: Credit Default Swaps Now Total $283 Trillion: "Last week the International Swaps and Derivatives Association said that at the end of June, the outstanding nominal value of swaps and derivatives was $283.2 trillion. As the New York Times pointed out over the weekend, that's a lot of money, vastly superior to the combined gross domestic products of the U.S., European Union, Canada and China -- a paltry $34 trillion -- or the value of all U.S. homes, which is about the same amount. 'To be sure, notional value is an exaggerated term as it greatly overstates the amount at risk in many contracts,' the Times noted. 'But the growth rate is real, and in the fastest-growing area of swaps -- credit default swaps -- notional value is closer to the amount at risk, because such swaps promise to make up the losses if a borrower defaults on the notional amount.'"----------This is a link to a blog post. The chart that accompanies it will blow the mind of anybody who looks at it long enough to understand it. Then look at the date of the post: September 28, 2006.

And now we are reading about how the financial sector of the US economy is melting into a puddle of goo because of...credit default swaps.

Freddie Mac's new chief to get $900,000 salary - Sep. 23, 2008: "WASHINGTON (AP) -- Mortgage finance company Freddie Mac says its new chief executive is earning a base salary of $900,000 a year, a 25% pay cut from his predecessor who also received sizable bonuses and stock options."------------------Nice to see all this belt-tightening at Freddie Mac, now that we the taxpayers have taken it over and all. A mere 900K for the base salary, while his full salary package is being determined, mind you. This is just to tide him over. Isn't that special?

FOXNews.com - FBI Investigating Potential Fraud by Fannie Mae, Freddie Mac, Lehman, AIG - Local News | News Articles | National News | US News: "Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Mueller has previously said the FBI's hunt for culprits in the nation's subprime mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments. The investigations revealed Tuesday come as lawmakers began considering whether to approve emergency legislation that would give the government broad power to buy up devalued assets from troubled financial firms."-----------------Pardon my skepticism, but I can't help wondering if this is a conveniently timed leak intended to convey the impression that the Bush administration isn't just showering the financial industry with taxpayer largesse, but investigating...seeking to find and punish the bad guys who created this mess, whoever they may be (and I should emphasize that I am not blaming any particular individuals for the economic debacle--I'm just talking about the way this leak makes things look).

Fort Lauderdale condo association has dog fight -- South Florida Sun-Sentinel.com: "Michael Colyer lost his cool with his condominium board's president, so now the condo association wants a judge to order him to get lost when it comes to future meetings."------------No sooner do I blog about dogs than up jump a couple of schnauzers and nip a Shih Tzu, leading to a big row at the condo association meeting, with F-bombs thrown around, and next thing you know the association wants a TRO barring the hurler of the F-bombs from meetings and "other condo functions," which I assume amounts to shunning.

Monday, September 22, 2008

CARPE DIEM: Size of U.S. State Economies vs. Foreign Countries: "We often lose sight of: a) how big the U.S. economy is, b) how productive American workers, and how much we produce vs. other countries. After all, who can get their mind around $13 trillion, the size of the U.S. economy measured by GDP ($13,000,000,000,000)?

World GDP is about $47 trillion according to the CIA World Factbook, so the U.S. economy produces more than 30% of world output every year, with just 5% of the world's population."-------------A little perspective helps to get a sense for the kind of money this bailout represents. The map that accompanies the post is astounding. Russia=New Jersey???

Bailout Prevents Great Depression 2.0 - Capital Commerce (usnews.com): "What would be the dollar cost of not bailing out Wall Street? Try a number north of $30 trillion. (The awful math is detailed below.) That's why Hank Paulson and Ben Bernanke were so scared last week."------------------That number will get your attention in a hurry. How much money is there in the world?

Woman whose dogs mauled neighbor gets 15 to life: "SAN FRANCISCO (AP) - A judge has sentenced a dog owner to 15 years to life in prison, seven years after her canines fatally mauled her neighbor in an upscale San Francisco neighborhood."-------------This is a highly unusual sentence. Normally the owner of a dog that attacks somebody gets a small fine and maybe a civil suit. In this case, these dogs were huge, vicious beasts raised by white supremacists, and the owners were attorneys who represented the creeps and acquired the dogs from them. The woman who died was opening the door to her apartment and the dogs were in the hall with their owners. They attacked her and the owners couldn't get them off her. It was a horrific incident.

Apparently this was in an apartment building, but the issue that comes to mind is the presence of potentially dangerous dogs, such as those Presa Canarios, pit bulls, etc., in condo and hoa developments. Most condos have rules on the number and/or size of pets. Many HOAs are much less restrictive. I have been consulted by people who had problems with their neighbors' dogs, which were legal under existing rules but scaring the daylights out of everybody. Of course, the owners say the dogs are harmless and just look scary. Seems to me that this is a difficult situation where there are generally two sides to the story. There is no easy solution. Do you ban certain breeds, and if so, besides pit bulls, which ones? Do you give the dogs disposition tests? Do you go by weight? Give them one free bite? How much power should people have over the neighbor's choice of pet? Not an easy issue to be fair about.

(PS: would the pit bull lovers please spare me the lectures about what wonderful misunderstood animals they are? I've heard it all before and it is nonsense. I could fill this blog with stories of people mangled by pit bulls. I know some of them are great dogs, but they are unpredictable time bombs and should all be sterilized.)

Business & Technology | WaMu loaned millions to California home flippers convicted in fraud scheme | Seattle Times Newspaper: "In July 2007, Vijay and Supriti Soni of Corona del Mar, Calif., paid $440,000 for a home at 2129 W. Civic Center Drive in Santa Ana. Five weeks later, they resold the house to Javier Hernandez, the family gardener and handyman, for $660,000. That's a 50 percent gain in 38 days — at a time when real-estate prices in Santa Ana were plunging. But the lender that financed both mortgages, Washington Mutual, took a bath. Last March, Hernandez's loan went into default and in July the bank foreclosed. On the trustee's deed, the bank listed the home's value at $377,137 — $220,000 less than the outstanding loan...The Soni family's transactions with WaMu indicate it continued making risky loans long after its underwriting standards were supposedly tightened in mid-2007, said James Barth, a senior finance fellow at the Milken Institute in Santa Monica."-------------Ah, the good old days. Can I be excused for politely asking why WaMu should not bear the full financial consequences of making loans like this? In other words, why should a single penny of tax dollars go to absolve WaMu of whatever loss they suffer here? Why is it even a public policy question at all? People are free to do dumb things with their money. When I do dumb things with mine, I lose it. WaMu spent years aggressively advertising their willingness to lend money to just about anybody. It seems that they meant it, so give them points for honesty. But it is still dumb. I'm not saying the whole bailout package is a bad idea, because I don't know at this point. But I hope banks that just did incredibly stupid things don't get bailed out.

Science unveils hidden drivers of stock bubbles and crashes: "'In standard economic theory, the way that prices in all markets are meant to be set depends on people being rational and having access to all available information,' says David Tuckett of the Psychoanalysis Unit at University College London.

'This way of looking at things is almost completely wrong,' he said. 'Markets are operated by human beings.'"------------------This is worth reading. The people who really need to read it won't. That would be the libertarians and other free-marketer zealots who insist that we should model public policy on the assumption of rationality.

City bylaws torpedo pirate ship tree house - USATODAY.com: "Architect Andrew Dewberry and a crew of friends spent Saturday dismantling the pirate ship tree house he's had in his Vancouver yard for two years. He said he had no choice after a court ordered it to be removed for not complying with city bylaws."-------------------------Arrrrrr. Prepare to repel boarders, ye scurvy bilge rats!

Do you owe more on your home than it is worth?: "Its study extrapolated national trends that showed 17 percent of home loans between 2002 and 2007 were subprime and that 30 percent of all mortgages during that time would be upside down. In Pima County over that same period, 38 percent of home loans were subprime.That and rapidly falling property values lead the council to project that a third of all mortgages in Pima County could be more expensive than the property they back.A subprime loan is one made to a borrower who doesn't qualify for a home loan under Fannie Mae or Freddie Mac lending guidelines."----------------------That is a heck of a lot of subprime loans. How much of this mortgage crisis is caused by deregulation of the lending process, and how much by government policies that basically forced lenders to make loans to people who couldn't afford to buy any house at all? I don't know, but when this whole debacle is studied it will be interesting to see how the under-regulation vs. over-regulation balance comes out.

Sunday, September 21, 2008

Man vows to fight garden gnome arrest threat | Mail Online: "A man vowed to keep a glowing garden gnome on display today in defiance of a police notice. Gordon MacKillop even faces possible prosecution over the offending ornament. He was woken in the night by two police officers who warned him that the solar-powered gnome, dressed in full police uniform, was offensive to his neighbours. They served him with a notice under the Protection From Harassment Act 1997 for 'placing a garden gnome with intent to cause harassment to Mr John McLean'. The notice, issued on August 30, also accuses Mr MacKillop of intimidating potential buyers of former policeman Mr McLean's £209,000 cottage in Treovis, near Liskeard, Cornwall. It warns the 46-year-old that he could be arrested and prosecuted."------------So, what is the verdict on this gnome? Take a look and decide.

I say not offensive, definitely not intimidating, but probably irritating. What say you?

About Me

I am a professor of political science at the University of Illinois at Chicago, and an adjunct professor at The John Marshall Law School in Chicago. Nothing contained in this blog represents the opinions of UIC or John Marshall, and nothing you see here is legal advice. You can reach me at ecmlaw@gmail.com